U.S. Markets
Where we
are today
Where we
are going in the future
DYI: Interest rates since March
of 2020 have sky rocketed thus smashing the principal value of long term
bonds. Interest rates over the next
decade and possibly two will be ever increasing lows with ever increasing highs
all pushed by insane fiscal spending with a willing central bank to monetize (inflate)
these debts. Shorter term recessions
will come and then go thus having a yo-yo effect upon rates. It is very possible the U.S. economy is in
the beginning threshold of recession thus interest rates over the shorter term
will possibly fall. How low interest
rates go will depend upon severity of the recession. However over the longer term interests will
have bias towards ever increasing rates.
DYI: Gold essentially bottomed
out – August 1999 at $251.70 – at the top of the Dot.com bubble. Silver bottomed in November 2001 at $7.18. The obvious big winner has been gold over this
past twenty plus years. As investors what we are most concerned is the Dow to
Gold Ratio currently at 17 to 1 with the very long term average at 10 to
1. With stocks at nose bleed valuation
levels gold and its cousin silver will continue to have upside potential all
carried out in typical yo-yo fashion.
DYI: Long term bonds until
recently didn’t inspire DYI’s investment formula as interest rates were well
below their historical norms. Now that
rates have moved slightly above their historical average investment in this
interest generator has merit.
Stocks have been at nose bleed valuation levels for what seems to be eternity for they hold zero merit at this time, only
one level from outright max-optimism.
Conclusion:
Stocks hold zero value; long term bonds have modest investment merit;
gold/silver outstanding along with short term notes and bills.
AGGRESSIVE PORTFOLIO - ACTIVE ALLOCATION - 11/1/23
Till Next Time
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